MetroPCS Loses Subscribers In Q4; Stock Falls

MetroPCS Communications (PCS) early Monday said it had a net loss of 93,237 wireless subscribers in the fourth quarter, sending shares down 2% in early trading.

MetroPCS, which agreed in early October to merge with Deutsche Telekom (DTEGY)-owned T-Mobile USA, recorded a net addition of 197,410 wireless users in Q4 2011.

"This is the first time PCS has lost subscribers on a net basis in Q4, which is typically its second strongest quarter behind Q1, and marks the company's third consecutive quarter of net subscriber losses," UBS analyst John Hodulik said in a report. "We believe this underscores the urgency with which the company pursued merger partners before reaching a deal with T-Mobile in October."

The Dallas-based company will report full financial results in early February. MetroPCS said in a press release that it had 8.9 million customers as of Dec. 31, with nearly 25% using its 4G LTE (long-term evolution) network.

MetroPCS' customers do not sign service contracts but buy minutes as needed. Analysts say competition has intensified in the prepaid market, where MetroPCS has competed mainly vs. Sprint Nextel (S) and T-Mobile. Verizon Wireless, co-owned by Verizon Communications (VZ) and Vodafone (VOD), is marketing more aggressively in prepaid services, analysts say.

"Today's pre-announced Q4 2012 subscriber results are well below our expectation of a gain of 63,000 and consensus expectations of 50,000 adds," said Craig Moffett, analyst at Bernstein Research. "The results from MetroPCS suggest that prepaid (growth) may be rapidly deteriorating and competitive intensity is rising."

Moffett added, though, that Deutsche Telekom will not back out of its deal to acquire MetroPCS because it needs radio spectrum. In mid-December, Sprint said it would acquire all of Clearwire (CLWR), putting to rest speculation that it would counterbid for MetroPCS. Some analysts says T-Mobile is a better fit for MetroPCS, as IBD has reported.

Shares in MetroPCS have fallen 25% since the T-Mobile announcement in early October.

MetroPCS Communications (PCS) early Monday said it had a net loss of 93,237 wireless subscribers in the fourth quarter, sending shares down 2% in early trading.

MetroPCS, which agreed in early October to merge with Deutsche Telekom (DTEGY)-owned T-Mobile USA, recorded a net addition of 197,410 wireless users in Q4 2011.

"This is the first time PCS has lost subscribers on a net basis in Q4, which is typically its second strongest quarter behind Q1, and marks the company's third consecutive quarter of net subscriber losses," UBS analyst John Hodulik said in a report. "We believe this underscores the urgency with which the company pursued merger partners before reaching a deal with T-Mobile in October."

The Dallas-based company will report full financial results in early February. MetroPCS said in a press release that it had 8.9 million customers as of Dec. 31, with nearly 25% using its 4G LTE (long-term evolution) network.

MetroPCS' customers do not sign service contracts but buy minutes as needed. Analysts say competition has intensified in the prepaid market, where MetroPCS has competed mainly vs. Sprint Nextel (S) and T-Mobile. Verizon Wireless, co-owned by Verizon Communications (VZ) and Vodafone (VOD), is marketing more aggressively in prepaid services, analysts say.

"Today's pre-announced Q4 2012 subscriber results are well below our expectation of a gain of 63,000 and consensus expectations of 50,000 adds," said Craig Moffett, analyst at Bernstein Research. "The results from MetroPCS suggest that prepaid (growth) may be rapidly deteriorating and competitive intensity is rising."

Moffett added, though, that Deutsche Telekom will not back out of its deal to acquire MetroPCS because it needs radio spectrum. In mid-December, Sprint said it would acquire all of Clearwire (CLWR), putting to rest speculation that it would counterbid for MetroPCS. Some analysts says T-Mobile is a better fit for MetroPCS, as IBD has reported.

Shares in MetroPCS have fallen 25% since the T-Mobile announcement in early October.

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